Dabur Open To Higher Stake For Aviva In Life Venture

Dabur Ltd is open to an additional stake to its foreign partner in Aviva Life Insurance, a 74:26 joint venture, when regulations permit. "If they want to increase their shareholding, they can have it. I see no problem," said A C Burman, chairman emeritus of Dabur Ltd.

Foreign insurance companies are hopeful of a relaxation in the 26 per cent investment ceiling.

"We have seen a relaxation in banking on foreign investment. When confidence for the industry is established, we expect the government to follow suit with insurance as well," Richard Harvey, group chief executive, Aviva Plc said.

Harvey did not see the investment ceiling as being helpful or necessary. "In China, the permitted shareholding is 50:50, and this is why the Chinese economy is receiving twice as much investment as compared to India," he said.

Burman however, held a view that since the regulations further establish the divestment by partners to hold only 26 per cent each 10 years down the road, "it is immaterial who controls what".

He said that as the UK-based CGU knows insurance better, he did not see any issue on giving them management control.

Aviva Life Insurance, which commenced operations in June this year, has already sold 1,500 policies in the first six weeks. "Forty per cent of these have been unit-linked, which shows the growing sophistication in the long-term planning nature of the Indian market," Stuart Purdy, CEO of the Indian joint venture, said. Aviva Life hopes to launch its pension product in two months.

India and China are seen as growth opportunities for Aviva Plc, the seventh largest insurance company in the world and the largest in the UK, with assets of 200 billion pounds.

"The insurance growth rate in India will be more than that of the world growth rate of 10 per cent, as the country's gross domestic product is 3 per cent to 4 per cent higher than that of developed countries," said Harvey.

The best market for Aviva is currently Spain, where bancassurance is playing a key role in sales.

Harvey anticipates bancassurance to play an important role in the sales of insurance products in India. The Indian venture has already tied up with four banks.

"There is considerable opportunity in bancassurance in India as banks are considered to be trusted, having good access to clients and are already involved in short-term financial planning of customers. There is a natural synergy between the two businesses," said Harvey.